Goldman Sachs's risk appetite measure is at its highest point in history

LONDON – The measure Goldman Sachs uses to calculate market
optimism, or appetite for taking risk, hit its highest ever point
last month as stock and commodities prices rallied in
December.

"Valuations are at very high levels. And that concerns us when it
comes to making progress in stocks, unless you maintain a very
high level of optimism," Christian Mueller-Glissmann, senior
multi-asset strategist valuations, said at a conference in London
on Monday.

"This is a chart which a lot of people have in the back of their
mind right now. It's our risk appetite indicator. That
essentially shows you across asset classes what the risk appetite
is. And it has equity risk premium in there it, it has VIX, it
has everything that reflects how bullish markets are and it's
real time,"

And guess what, in the middle of December, that indicator had the
highest level in the history of the indicator. We are not at the
beginning of this optimism trade, we're really in the middle of
that optimism trade."

Here is the chart:

Goldman Sachs

Markets have been buoyed by a combination of easy monetary
conditions, with interest rates staying low, combined with the
prospect of more government spending, especially in the US. The
new Donald Trump administration is expected to cut corporate and
personal taxes and boost spending, sending stock markets up to
record highs.